Glossary of Terms

Search common forex trading terms and definitions from A to Z.

Below is a glossary of terms that are used in the online trading industry. Select the first letter of the word you are seeking from the list above to jump to the appropriate section of the glossary.

Dividends

A dividend is a way of a company to distribute a percentage of its net earnings to its shareholders. The dividend amount is decided by the company’s board of directors, and can be issued as a cash payment, shares or other assets. Most commonly, the dividend is determined in terms of money per share, which means that each shareholder will get a dividend respectively to his holdings, for example: In case you own 1,000 shares, and the dividend announced is $3 per share – you will get $3,000. Other common way of quoting a dividend is terms of percentage of current market price, which is also known as “yield”, for example: If you hold 1,000 shares, the current market price is 100, and the dividend announced is 2% – it means you will get $2 for every share you hold, which are $2,000. Other ways to pay a dividend are: Shares (giving out shares instead of cash), property, interim and more. When a dividend is paid, the company’s value is immediately effected for the simple reason that the cash it is giving out as a dividend will no longer belong to the company, so its share price decreases in the rate of the dividend payment. The change in the share’s price is taking place in the ex-dividend date. As a result, Fortrade needs to credit/debit the clients holding the dividend paying share during the ex-date, in order to cover for the paid dividend and making sure that all of our shareholding clients will receive the dividend and won’t be effected by “fake” declines of the share’s price. * The term “fake” refers to market price movements that are not a result of real market conditions, but a result of a synthetic conditions like dividend payout.

All client holding a dividend paying share in a short position during the ex-dividend day will be debited in the size of the dividend.For example:If you hold 1,000 shares in a short position in an opening price of $110 while the current market price is $100, and the paid dividend is equal to $2 per share → The share price will drop in $2 in the ex-dividend day, meaning that you will earn more money in your short position due to the “fake” share price movement, so Fortrade will have to charge that exact amount (with no further fees or commission) to your commission. P&L before the ex-dividend day → 1,000 * (110 – 100) = $10,000 <shares amount * (opening price – market price before the dividend payout)> P&L after the ex-dividend day (assuming there were no other real market effects on the share price) → 1,000 * (110 – 98) = $12,000 <shares amount * (opening price – current market price)> Dividend charge → 1,000 * $2 = $2,000 <shares amount * dividend paid per share)>Final P&L calculation → 1,000 (110 – 98) – 2,000 = $10,000 <shares amount * (opening price – current market price) – Dividend amount>

All client holding a dividend paying share in a long position during the ex-dividend day will be credited in the size of the dividend.For example:If you hold 1,000 shares in a long position in an opening price of $90 while the current market price is $100, and the paid dividend is equal to $2 per share → The share price will drop in $2 in the ex-dividend day, meaning that you will lose money in your long position due to the “fake” share price movement, so Fortrade will have to credit you with that exact amount (with no further fees or commission) to your commission.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 86.59% of retail investor accounts lose money with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Be Aware: You can lose all, but not more than the balance of your Trading Account. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice. This material does not constitute an offer of, or solicitation for, a transaction in any financial instrument. Fortrade accepts no responsibility for any use that may be made of the information and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information, consequently any person acting on it does so entirely at their own risk.

The information on this site is not directed at residents of the United States or Belgium and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

When performing transactions in the OTC Forex market, the possibility of making a profit is inextricably linked with the risk of losses. Conducting transactions can lead to the loss of part or all of the initial investment. Before commencing operations, make sure you understand the risks involved and have sufficient skills to invest.

The information on this site is not directed at residents of the United States or Belgium and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Fortrade Ltd.is authorised and regulated in UK by the Financial Conduct Authority (FCA), Firm Reference Number (FRN): 609970.Click here to see Fortrade on the FCA website.

Fort Securities LLC.is authorised and regulated in Belarus by the National Bank of the Republic of Belarus (NBRB), Firm Reference Number (FRN): 193075810.Click here to see Fort Securities on the NBRB website.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 86.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.